For drug and alcohol addicts who can scrape up $15,000 but are disinclined to check into a traditional rehab center, it may seem like a good bet to go to a two-weekend outpatient program at a Prometa Center.
But for investors in Prometa's parent company, West Los Angeles-based Hythiam Inc., the bet is a little less clear. Even the four Wall Street analysts covering the stock temper their "buy" recommendations with several caveats.
"This is what I call a binary stock it's either going to be a winner or the company is going to go out of business," said Gene Mannheimer, a San Diego-based health care equity analyst at Caris & Co.
The company has steadily grown over the past two years, even while lacking clinical trials that would burnish its legitimacy, and solid U.S. patents that would protect it from copycats.
Prometa advocates a three-pronged approach for treatment: medication, nutrition and counseling. Prometa's advocates are passionate about the treatment's potential to revolutionize substance-abuse treatment.
"Crack addicts can't sit in front of a crack bag and not light up, so getting a crack addict not to think about crack is a feat," said Dr. Matthew Torrington, who became medical director of the company's flagship Prometa Clinic in Santa Monica this year, after witnessing what he considers astounding results in patients he had referred to a Prometa-licensed doctor. "The meds aren't a magic bullet, but I've seen them make a difference."
Hythiam's business model is both a strategic strength and a potential Achilles' heel. Until recently, the company didn't manage its own outpatient treatment centers. The focus was on licensing the Prometa name and treatment protocol to about 45 doctors, outpatient clinics, government agencies, and an increasing number of inpatient facilities. The company collects a fee for every patient treated.
There are two potential hazards to Hythiam's growth.
The first is that the company could be accused of promoting an unproven technology. Until results from the first controlled clinical trial were released this summer, the company had to rely on anecdotes and data compiled by some of its licensees.
A second risk for the company lies in protecting its intellectual property. The company had some success in Europe and last month won a Mexican patent for its cocaine treatment, but has yet to gain key patents in the United States, likely to be its largest market.
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